Advice to Settle Debts if you Own Two Properties

If I have a 20k cc debt with B of A and I try to settle it, is it a problem if I have 2 countrywide mortgages?

If I have a 20k credit card debt with Bank of America and I try to settle it, Is it a problem if i have 2 countrywide mortgages on 2 separate properties? Also the credit card is only in my name and the properties and mortgages are in both mine and my wife's name.

Published: May 11, 2009

It is very likely that Bank of America will pull your credit report when you contact them to attempt to settle the debt, if they have not done so already (which they probably have). When they see that you own two properties, they may be reluctant to settle your credit card account with you. After all, if you can afford to pay two mortgages, they may say, why can you not pay your credit card bill? And, if you cannot afford to pay your credit card bill, why don't you sell one of your houses? I want you to understand that I am playing the "Devil's advocate" here; I understand that in many cases it is not possible to sell a property because you may owe more on it than it is worth, because it was purchased for the use of an elderly relative, or any of a myriad of other reasons. The bank to which you owe $20,000, however, will probably not be so understanding, and may be unwilling to offer you a reduced balance settlement due to the fact that you own multiple properties. The fact that the properties are in both you and your wife's names will likely not cause any significant difference in how the creditor considers the fact that you own two homes.

Another reason that the bank may not want to settle is if you have substantial equity in your properties, especially the one that you are not using as your primary residence; in that case, the property may be susceptible to a forced sale, allowing the creditor to liquidate the equity in the property to pay your debt. In order to force the sale of your property, the bank would need to file a lawsuit and obtain a judgment against you. While most banks decide not to sue the majority of consumers who fall behind on their credit card debts, some will be more aggressive about taking action against consumers who have multiple properties. You read more about what actions creditors can take if they obtain a judgment against you, which depend on the state in which you live.

Whether or not Bank of America will be willing to settle with you depends are many factors, including how collectible they think the debt is, your assets, how delinquent you are, and how much the bank needs the money. I encourage you to contact the bank to discuss the possibility of settlement. It is possible that the issue of your two properties will not even come up, but I wanted you to be prepared for the possibility and to know what the bank may say to you. If the bank makes a reasonable settlement offer which you would like to accept, you should know that most banks will expect payment of the full settlement amount within 1-2 weeks, though some will also allow consumers to stretch out settlement payments over a period of a few months. If you would like to read more about negotiating with your creditors, I invite you to visit the Bills.com Debt Negotiation page.

I wish you the best of luck in your efforts to settle this debt.

I hope that the information I have provided helps you Find. Learn. Save.